Peru will be far from "unstoppable" unless it takes new steps to further improve its education, technology and infrastructure levels, and become more competitive in the global economy. It has a long way to go on each of these fronts.

In the Global Competitiveness Index released last month by the World Economic Forum, Peru ranked 73rd among 139 countries, more than 40 places behind Chile.

In the latest worldwide PISA test of 15-year-old students' proficiency in reading comprehension, math and science, Peru ended 63rd of 65 countries. It had the worst performance among the Latin American countries that participated in the test.

When it comes to patents of inventions, Peru registers only about one patent a year with the U.S. Patent and Trademark Office, compared with South Korea's 8,800.

Due to supply/demand of market effect, large nations have hard time to be super rich since anything large nations sell would flood market and become cheap (low value added). Any thing large nations buy would become expensive due to too much demand unless superpowers can invade and robbing resource nations.

Small nations can become rich easily due to exactly opposite effect. Luxembourg, singapore, ect.

National verbal skill also contribute its wealth. For the same productivity, better verbal skill means better salesmanship and extract more value in international trade.

Seems to me that the top four countries (Qatar, Luxembourg, Norway and Switzerland) all have very small populations. So it naturally follows that GDP per person is going to be very high (perhaps even statistically biased).

What is more impressive is that Australia, Germany and especially the US are at the top of the list despite having much larger populations to water down the per person statistic.

Finally, one should avoid making a reference to a country (Finland) that isn't even labeled in the associated chart.

Burundi, Eritrea, Central African Republic and Togo are about as large as Norway, smaller than Switzerland and all in the bottom 10 of the world rich list.
A small population only helps GDP per capita if you have a niche or strong commodity.

Around 100,000 people from neighbouring Geemany, France, and Belgium come to work to Luxembourg every day. They contribute to GDP but are not counted in the 'per capita'. Given that the population of Luxembourg is around half a million souls, GDP per capita is vastly distorted upwards.

This graph can crudely be divided into two groups of countries: 1. Countries riding a resource boom, or having a very strong presence in some or other sector -- likely an overweight financial sector, then 2. Countries that actually have strong performance in more than one economic sector.

Some countries lag the trend line by some margin, Australia (coal, ore), Norway & the UAE (oil), Luxembourg (finance) and will need to think about entering new sectors entirely. Other countries such as The US, Germany, Malaysia and China are ahead of the trend line and have complex economies involved in multiple sectors and are in the vanguard in many of those. Countries, particularly Russia, which is blessed with considerable natural resources, and has notable technical dexterity, really needs to catch a wake-up.

Why are some countries able to generate high GDP/p for their given competitive advantage than others?

Norway has an obvious answer - oil. Oil generates a lot of wealth in Norway and needs no competitive advantage to do so. Most of the other s far above the curve can be explained in terms of exported natural resources. But why do other countries deviate significantly below the curve? Why does Switzerland have such a low GDP?

You mean why does Venezuela's 28 million people produce a lower GDP than Norway's 5 million, and by extension have lower GDP per capita and score lower competitively?

Rule of law. Transparent state organs. I think the Norwegian government, well, Norwegians have (responsible) free reign over their economy, their oil revenues are distributed throughout the economy into promising start-ups, and a wealth fund for the future. I think South Africa falls somewhere alongside Russia, India and Venezuela, but there's also history. A very large portion of the population has been held back on pretty much all the basics -- shelter, health and education -- the government is simply focused on addressing those - perhaps to its detriment; more innovative ideas could power ahead many goals. Countries such as South Africa and Russia which have industrial capability and vast resources seem mired in corruption and seem unable to produce clear vision for the future.

Switzerland and South Korea have a similar presence on the Global 500, but South Korea has over six times Switzerland's population - meaning it has a potentially far larger domestic economy - it's nearly twice as large.

I disagree - what a country like Norway does with oil/resources revenues is very important, very relevant to the topic. That money can be seed money for entirely new industries, innovation in a country. Note the UAE's expansion beyond oil.

We're in agreement then, on you second point (rich countries without oil), as per my original comment.

Maybe expanding the argument even further, why is it that some resource rich countries have lower economic complexity than countries which are not particularly* resource rich? A = Vision.

And one of the nicest places to look for answers to this question, and many others is the Harvard/MIT Atlas of Economic Complexity -- a beautiful ~84 MB .pdf loaded with information you'll find hugely interesting.

Norway, for example, has a less complex economy than all of its Scandinavian peers, Australia is less complex than countries such as South Africa and Argentina, Qatar ranked lower than Zimbabwe.

* = This is an oxymoron, the economic complexity of the United States, for example, hides the fact that that country is hugely resource rich.

Indeed Norway has a less complex economy. There is little in the way of industrialization there, even around its largest city, Oslo. Stavanger has a highly developed industry built around off-shore oil. Almost every person I know there works for the government.

There have been efforts to diversify, but with only modest success. Much of their sovereign wealth has been invested overseas, or into infrastructure - beautiful bridges, long tunnels, opera houses,.... I would not criticize their choices (my friends would be angry), but those investments do not lead to an increase in their GDP. That comes from oil.

OK, I'm fed up with this. These charts seem to be Mickey Mouse statistics.

Did The Economist ran standard outlier tests that are taught in the 3rd year statistics? Because those Quatar/Luxembourg/Norway things look like outliers to me.

What was the choice of the distribution for the error? How was it tested? Because it sure looks to me like there is an increase with variance that is associated with the increase of the predictor variable, something that often calls for more argumentation in error distribution and error fit.

And, finally, what was the rationale behind the choice of the model? While log models, which are implied by the shape of the plot here, are often the first choice in an analysis like this, were the points here tested against something more sigmoid-like, because the X scale, the competitiveness measure, is clearly a bound number, and applying log models with a bound predictor (i.e. which has a set upper bound by definition) often gives funny results? Was at least a likelihood ratio test (a relatively foolproof test of comparing quite different models) applied?

Wait, you're expecting rigorous, well designed statistics from the Economist?? :)

The Economist generally does *ok* but I 100% agree with you, most of these sorts of arguments are pretty poorly designed and/or rationalized.

Unfortunately, this reality seems to be the way of things today in media. Most (all?) reports seem to be overly-watered down with heavy reliance on correlation (with little understanding of the old adage: correlation does not imply causation).

I whole-heartedly agree. Your last line is almost exactly what came to my mind just a couple of minutes ago when commenting on the ridiculous plot of belief in hell against crime rates from several weeks back.

Could you provide the article that states that the "Swedish economy is thriving"? Thanks to an undervalued currency that is because the immigration laws and politics of this country are as messed up as the American counter parts.

Let's see for how long we can keep up the welfare state alive if things continue this way.

You clearly don't know what you are [writing] about. Perhaps your worship of Assange has clouded your vision???

Sweden doesn't have an undervalued currency (according to the Big Mac index, it's waaaaaaaaaaaay overvalued). During the past four months the SEK went from 9.15 to 8.25 against the euro (~10% increase) and from 7.3 to 6.6 against the USD.

The Swedish economy is chugging along fine (especially compared with other European countries) and the country, as usual, will have another surplus in 2012. The welfare state is alive and kicking.

That you mentioned immigration laws implies that you are a bitter person with anti-Muslim tendencies. If you're Swedish, then you certainly are a fanboy of the Sverigedemokraterna.

It is hard to understand how Norway could be ranked so high in the competitiveness list. It's productivity per manhour is about one third of the USA. GDP per person is also misleading. This should be divided by what each dollar buys. Again as example, Norway is almost three times as expensive as the US for almost anything an individual buys.

The computation of GDP per person already considers the differences in prices between two countries. They don't just calculate the "norvegian crown per person" and translate it in "dollar per person" according to the exchange rate.
The system is complicated in the construction, but the mechanism is that they measure the GDP using a common set of prices for all countries. That set is called Purchasing Power Parity.

There is something wrong with $100k per capita reported for Norway. I remeber this being about $40k per capita about 10 years before, when I lived there. Did it really double? The growth in Europe was less than 3% per year recently...
Also, when divided with the cost parity factor of 3 ($10/gallon gas, $20/lb steaks, $5/lb Turkeys and chicken, etc.), this should be about$30K per capita, even if it doubled.
The GDPs reported are real suspects.

It's automatically done: when you compute GDP per capita across countries you HAVE to do it according to the PPP criteria. Otherwise you'd have results that vary with the exchange rates of currencies among the world (and it'd not make sense: if let's say Brazil devalue its currency by 20%, brazilian people are not 20% poorer). You can believe me or not, this is a basic principle of macroeconomics.

Norway is the world's third largest net oil exporter. Ten years of 3% compounds to 35%. Add some appreciation of the Krone against the dollar and yes, GDP per capita has shot up like a rocket. GDP per capita is $98k, GDP per capita at PPP is only $ 53k.

Singapore, Japan, Taiwan, South Korea and Malaysia are the five countries most to admire since they have done more with less!
Not much to dig out from the ground, starting from scratch, working hard on all fronts, investing in education and youngsters, open and friendly to foreigners and eager on good ethics.
They are some of the models to look at, visit, talk more with, starting business and friendship.

It's interesting then that the US, which has the world's third largest sovereign population, has the GDP per capita and competitively scores as high, as it does. Indeed, on both measures, it far exceeds all countries with around 27% or more of its population, apart from Japan, which it still marginally exceeds.

As already mentioned, GDP/person should be counted in terms of PPP rather than nominal figures but more importantly, it doesn't make sense to draw it on a linear scale. The scale should be logarithmic. If you go from $500 to $1K, it's a huge step in personal income whilst from $40K to $40.5K hardly makes any change at all. However, in a linear scaled chart both differences are shown as equally wide. This is complete nonsense and misleading.

Also the red line would suddenly become a straight one with a logarithmic scale on the y-axis.

Because it is based on nominal figures i've started to think, for the commodity countries, along the lines that this may give an idea of what is the underlying currency valuation versus current market rates. Or, what the gap is for each country to improve their underlying competitiveness to justify their currency position. Then also asking myself what the curve would look like without these commodity outliers.

Absolutely. They should do a global ranking for hot loose women immediately. According to my data base, Luxembourg will be around the 50th percentile. Higher scorers would include Turkey, Russia, Lebanon, Azerbaijan, Iran, Australia, Uzbekistan, Italy and Hungary.

Fears are generated by Western Media on on the dirt poor but super-competitive China, India along with the rest of BRICS as the twin rising terrors are obviously over-rated. Nevertheless they have been useful as a bogey-men for any Western politician aspiring for high office.

Today many in the Wall Street think that slowdown in China rather the Euro/Greek debt is the greatest threat to global economic recovery. In fact, many are now so impatient that they think creating another World war will be the only solution to get the military industrial complex going and to create jobs.